nep-afr New Economics Papers
on Africa
Issue of 2012‒01‒10
eight papers chosen by
Quentin Wodon
World Bank

  2. Vulnerability to asset-poverty in Sub-Saharan Africa By Echevin, Damien
  3. The Long-Run Effects of the Scramble for Africa By Michalopoulos, Stelios; Papaioannou, Elias
  4. Post-HIPC growth dynamics in Sub-Saharan Africa By Bayraktar, Nihal; Fofack, Hippolyte
  5. Long- and Short-Run Relationships between House and Stock Prices in South Africa: A Nonparametric Approach By Goodness C. Aye; Mehmet Balcilar; Rangan Gupta
  6. Rural Demography, Public Services and Land Rights in Africa: A Village-Level Analysis in Burkina Faso By Margaret S. McMillan; William A. Masters; Harounan Kazianga
  7. Private Trees as Household Assets and Determinants of Tree-Growing Behavior in Rural Ethiopia By Mekonnen, Alemu; Damte, Abebe
  8. From Vice to Virtue? Civil War and Social Capital in Uganda By Giacomo De Luca; Marijke Verpoorten

  1. By: Rangan Gupta (Department of Economics, University of Pretoria)
    Abstract: Empirical evidence on the whether the inflation-targeting South African Reserve Bank (SARB) should also consider responding to exchange rate fluctuations, are contradictory. Against this backdrop of contradictory evidence, we revisit the issue by questioning if the inflation rate is more volatile than it would have been had South Africa not moved to a flexible exchange rate regime in 1995, using the cosine-squared cepstrum. We find that the CPI inflation in South Africa has become more volatile since the second quarter of 1995, post a flexible exchange rate regime, than it would have been had the country continued to pursue a fixed exchange rate policy. Based on this result, we can conclude that the SARB should perhaps respond to exchange rate fluctuations, however, we also warn against the cost of increased volatility in output that is likely to result from targeting exchange rate variability.
    Keywords: Cosine-Squared Cepstrum, Exchange Rate Regime, Inflation Targeting, Inflation Volatility, Output Volatility, Saphe Cracking
    JEL: C65 E42 E52 E64 F31
    Date: 2012–01
  2. By: Echevin, Damien
    Abstract: This paper presents a methodology to measure vulnerability to asset-poverty. Using repeated cross-section data, age cohort decomposition techniques focusing on second-order moments can be used to identify and estimate the variance of shocks on assets and, therefore, the probability of being poor in the future. Estimates from the Ghana Living Standard Surveys show that expected asset-poverty is a reliable proxy for expected consumption-poverty. Applying the methodology to nine Demographic Health Surveys countries, urban areas are found to unambiguously dominate rural areas over the unidimensional distribution of expected future asset-wealth, as they also generally do over the bi-dimensional distribution of present asset-wealth and expected future asset-wealth.
    Keywords: vulnerability; poverty; wealth; pseudo panel; stochastic dominance; Africa
    JEL: D31 D12 O15 O12 I32
    Date: 2011
  3. By: Michalopoulos, Stelios; Papaioannou, Elias
    Abstract: We examine the long-run consequences of the scramble for Africa among European powers in the late 19th century and uncover the following empirical regularities. First, using information on the spatial distribution of African ethnicities before colonization, we show that borders were arbitrarily drawn. Apart from the land mass and water area of an ethnicity's historical homeland, no other geographic, ecological, historical, and ethnic-specific traits predict which ethnic groups have been partitioned by the national border. Second, using data on the location of civil conflicts after independence, we show that partitioned ethnic groups have suffered significantly more warfare; moreover, partitioned ethnicities have experienced more prolonged and more devastating civil wars. Third, we identify sizeable spillovers; civil conflict spreads from the homeland of partitioned ethnicities to nearby ethnic regions. These results are robust to a rich set of controls at a fine level and the inclusion of country fixed effects and ethnic-family fixed effects. The uncovered evidence thus identifies a sizable causal impact of the scramble for Africa on warfare.
    Keywords: Africa; borders; conflict; development; ethnicities
    JEL: N17
    Date: 2011–11
  4. By: Bayraktar, Nihal; Fofack, Hippolyte
    Abstract: Access to debt relief under the Highly Indebted Poor Country Initiative enhanced the growth performance across Sub-Saharan Africa, especially in the subset of debt-ridden low-income countries. Over the past few years, these Completion Point countries have enjoyed significantly higher investments and growth rates, primarily fueled by the expanding fiscal space of the post-Highly Indebted Poor Country Initiative era. They are also weathering the adverse effects of the global crisis much better than their non-Highly Indebted Poor Country Initiative counterparts. Despite these growth rebounds, the region is not likely to meet the Millennium Development Goals, however. Long-term growth projections from a simple macroeconomic model, which is applied to Ethiopia, suggest that prospects for reversing the widening income gaps with other regions of the developing world are limited. Under the baseline scenario, assuming current growth trends, the estimates show that it could take more than five decades for per capita real income to double in Ethiopia. However, even these gloomy prospects are likely to be undermined by the looming risk of another sovereign debt crisis. In effect, the experiments show that lowering interest rates on external debt would not bridge the widening income gap with other regions of the world, unless it is accompanied by a rapid expansion of capital accumulation financed by sustained inflows of foreign aid.
    Keywords: Debt Markets,Economic Theory&Research,Emerging Markets,Access to Finance,Currencies and Exchange Rates
    Date: 2011–12–01
  5. By: Goodness C. Aye (Department of Agricultural Economics, University of Agriculture, Makurdi, Nigeria); Mehmet Balcilar (Department of Economics, Eastern Mediterranean University, Famagusta, North Cyprus,via Mersin 10, Turkey); Rangan Gupta (Department of Economics, University of Pretoria)
    Abstract: This paper provides empirical evidence on the long- and short-run relationships between real house and stock prices of South Africa. Standard linear tests may not detect the existence of long- and short-run relationships between time series especially in the presence of structural shifts or regime changes, which, in turn, may cause nonlinearities in the observed series. Thus, in this study, both linear and nonparametric cointegration and Granger Causality tests were conducted utilizing a monthly data set over 1966:01 and 2011:06. Results from the linear cointegration test showed no long-run relationship between house and stock prices. At the same time, the linear Granger causality test produced no evidence of causality running in any or both directions either. In contrast, the nonparametric cointegration test showed the existence of a long-run one-to-one relationship between the two series, with the nonparametric Granger causality test, in addition, indicating a bi-directional causality.
    Keywords: House prices, stock prices, causality, nonlinearity, South Africa
    JEL: C22 E44 R31
    Date: 2011–12
  6. By: Margaret S. McMillan; William A. Masters; Harounan Kazianga
    Abstract: This paper uses historical census data from Burkina Faso to characterize local demographic pressures associated with internal migration into river valleys after Onchocerciasis eradication, combined with a new survey of village elders to document change over time and differences across villages in local public goods provision, market institutions and land use rights. We hypothesize that higher local population densities are associated with more public goods and a transition from open-access to regulated land use. Controlling for province or village fixed effects, we find that villages’ variance in population associated with proximity to rivers is closely correlated with higher levels of infrastructure, markets and individual land rights, as opposed to familial or communal rights. Responding to population growth with both improved public services and private property rights is consistent with both scale effects in public good provision, and changes in the scarcity of land.
    JEL: F20 H41 I18 J11 O12 O20
    Date: 2011–12
  7. By: Mekonnen, Alemu; Damte, Abebe
    Abstract: This study looked into tree-growing behavior of rural households in Ethiopia. With data collected at household and parcel levels from the four major regions of Ethiopia, we analyzed the decision to grow trees and the number of trees grown, using such econometric strategies as a zero-inflated negative binomial model, Heckman’s two-step procedure, and panel data techniques. Our findings show the importance of analysis at the parcel level in addition to the more common household-level. Moreover, the empirical analysis indicates that the determinants of the decision to grow trees are not necessarily the same as those involved in deciding the number of trees grown. Land certification, as an indicator of tenure security, increases the likelihood that households will grow trees, but is not a significant determinant of the number of trees grown. Other variables, such as risk aversion, land size, adult male labor, and education of household head, also influence the number of trees grown. In general, the results suggest the need to use education and/or awareness of the role and importance of trees and point out the importance of household endowments and behavior, such as land, labor, and risk aversion, for tree growing. Finally, we observed that, while tree planting is practiced in all four regions covered, there are variations across regions.
    Keywords: trees as assets, tree growing, Ethiopia
    JEL: Q15 Q23
    Date: 2011–12–28
  8. By: Giacomo De Luca (University of Leuven); Marijke Verpoorten (University of Leuven)
    Abstract: We show that armed conflict affects social capital as measured by trust and associational membership. Using the case of Uganda and two rounds of nationally representative individual-level data bracketing a large number of battle events, we find that self-reported generalized trust and associational membership decreased during the conflict in districts in which battle events took place. Exploiting the different timing of two distinct waves of violence, we provide suggestive evidence for a rapid recovery of social capital. Evidence from a variety of identification strategies, including difference-indifference and instrumental variable estimates, suggests that these relationships are causal.
    Date: 2011–12

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